EU to unveil new Russia sanctions as Ukraine truce teeters

MARIUPOL, Ukraine - Ukraine accused pro-Russian rebels of waging fresh attacks in the restive east on Monday, further imperilling a fragile truce as EU leaders prepared to approve punishing new sanctions on Moscow.

Russia warned it would retaliate against the measures, which the EU has nevertheless said could be suspended if Moscow observes the ceasefire deal and removes its troops from Ukraine.

The warring parties have each accused the other of breaching the pact since it was signed Friday, the first backed by both Kiev and Moscow to end a conflict that has plunged East-West relations to a post-Cold War low.

Ukrainian soldiers were strengthening their positions around the flashpoint port city of Mariupol after weekend shelling by the insurgents left one woman dead, while explosions were heard near Donetsk on Monday.

“Despite the ceasefire, Ukrainian positions are still coming under attack,” said Ukrainian defence spokesman Andriy Lysenko. “Russian sabotage and reconnaissance forces are attacking the terrorists’ positions under the guise of being Ukrainian servicemen.”

Russia will retaliate against a new round of Western sanctions over Ukraine and may block flights through its airspace, Prime Minister Dmitry Medvedev said in an interview published on Monday.

Medvedev also suggested that Western sanctions would not make the Kremlin change its course, adding that Russians - like the Chinese - would simply pull together in the face of new punitive measures.

The first attacks outside Mariupol late Saturday erupted only hours after Ukrainian President Petro Poroshenko and Russian leader Vladimir Putin both said the truce was “generally holding” and vowed to pursue further steps toward peace.

Poroshenko arrived in Mariupol on Monday in a show of solidarity with its fearful population.

Western governments accused Moscow of sending in hundreds of paratroopers and truckloads of weapons to back insurgents who launched a counter-offensive across the southeast in late August, dealing a devastating reversal of fortune for the Ukrainian military.

Mariupol has emerged as a key battleground with the insurgents apparently set on creating a land corridor between the Russian border and the Crimean peninsula annexed by Moscow in March.

“The night was calm, thank God. I heard explosions but they were far from here,” Vera, a retired building industry worker, told AFP. “The day before it was horrific. It was terrifying.”

Russia has repeatedly denied any involvement in Ukraine but Western leaders, deeply suspicious of Moscow’s territorial ambitions, have reacted by threatening new sanctions and boosting NATO’S military presence in eastern Europe.

In a further show of force, NATO and Ukraine launched naval drills in the Black Sea on Monday ahead of annual ground exercises next week.

EU President Herman Van Rompuy said the new sanctions due to be approved on Monday could be reviewed if the ceasefire proves “durable”.

“We have noted that Russia only consented with difficulty to serious negotiations. The ceasefire is an important step, but it is only a step,” he told Belgian television Sunday.

The new measures would boost existing measures imposed in July, targeting more individuals with travel bans and asset freezes, as well as tightening access to capital markets for Russian oil and defence companies.

The sanctions target Russian oil giants including Rosneft, the world’s largest publicly traded crude producer which is run by a close Putin ally, Transneft and the oil unit of gas conglomerate Gazprom.

Russian Prime Minister Dmitry Medvedev vowed to retaliate with “asymmetric” measures by forbidding European airlines from flying over the country on their lucrative routes to Asia.

“If we are sanctioned, we will have to respond, “ he told the Vedomosti business daily in an interview published Monday.

Russia’s economy is already on the brink of recession, hit by previous sanctions imposed in July over the shooting down over Ukraine of a Malaysia Airlines plane.

The 12-point ceasefire agreement signed in the Belarussian capital Minsk is nevertheless seen as the most significant to date after five months of warfare that has killed over to 2,700 people, according to latest UN figures Monday.

But it has left the political future of the separatist Donetsk and Lugansk regions uncertain, with rebel leaders vowing to press on with their campaign for independence across an area that accounts for one-sixth of Ukraine’s population and a quarter of its exports.

And although Poroshenko said he was “satisfied” with the truce, it has opened him up to accusations that he has surrendered to rebel advances and failed to reunify the nation under a pro-Western banner, as he promised at the time of his May election.

The Minsk accord calls on both sides to pull back from major flashpoints and provides for the creation of a security zone on the Ukraine-Russia border.

It also stipulates an exchange of prisoners - with about 20 soldiers handed back to Ukraine so far - and the supply of humanitarian aid to the devastated eastern cities.